Homeownership, mortgages, and unemployment

Abstract

According to Oswald's thesis, homeownership increases unemployment. Empirical research on micro-data has indeed confirmed that unemployed homeowners are less inclined to change their residential location and accept a new job elsewhere. However, it is also repeatedly found that unemployed homeowners tend to find a job more easily than otherwise comparable tenants. This paper aims to make a new contribution to the scientific debate on Oswald's thesis by addressing the risk attitudes of job seekers. We show that decreasing absolute risk aversion implies that the exit rate from unemployment is increasing in housing costs, in the context of a standard job search model. Therefore, the higher costs associated with leveraged homeownership may be the driving force of homeowners' observed labor market performance. We test this prediction on the basis of Dutch data on individual unemployment spells. Contrary to our hypothesis, we do not find evidence that a higher mortgage is associated with higher exit rates from unemployment. Rather, our findings support earlier microeconometric results that homeownership tends to accelerate a successful job search.

Did the post-1986 decline in the homeownership rate benefit the New Zealand labour market? A spatial-econometric exploration

“…They conclude that homeowners with a mortgage exit unemployment first, while outright owners stay unemployed the longest. On the other hand, Kantor et al (2015) do not find evidence in Dutch data on individual unemployment spells that a bigger mortgage is associated with higher exit rates from unemployment. However, they make the important point that risk aversion may impact on a worker's assessment of mortgage debt and job search behaviour.…”

“…As noted in the previous section, Baert et al (2014) and Kantor et al (2015) argue that homeowners are not a homogenous group with respect to their labour market behaviour. Generally, we would expect that those who own their homes with a mortgage will have greater search intensity, particularly if the mortgage is large, as the mortgagee must usually have employment to be able to pay the mortgage.…”

The Impact of Home Ownership on Life Satisfaction in Urban China: A Propensity Score Matching Analysis

“…People with higher income can afford to purchase houses from the market or to build their own houses (Kain and Quigley. 1972;Kantor et al 2015). High income also better enables people to pay a down payment and obtain mortgage (Chiuri and Jappelli 2003).…”

Homeownership in the equilibrium unemployment theory

“…(2006, 2008), Battu et al . (2008), van Ewijk and van Leuvensteijn (2009), Kantor et al . (2015) use a microeconomic approach.…”

“…Furthermore, there is large and important strand of literature that focuses on the impact of homeownership on unemployment, using both theoretical and empirical models (see, e.g. Dohmen, 2005;Munch et al, 2006Munch et al, , 2008Battu et al, 2008;van Ewijk and van Leuvensteijn, 2009;Rouwendal and Nijkamp, 2010;S anchez and Andrews, 2011;Rupert and Wasmer, 2012;Isebaert, 2013;Baert et al, 2014;Blanchflower and Oswald, 2013;Laamanen, 2013;Kantor et al, 2015) [1].…”